Posted on 21 February, 2020 | 4 mins
Business disruption costs. Add an uncertain global financial landscape, and you can find yourself in hot water fast. For small and medium-sized businesses looking to navigate turbulent waters, a business continuity plan is essential
Disruptions to business can cause loss of revenue, increased costs, and a resulting drop in profitability that insurance, government grants or loans simply don't cover. A business continuity plan is essential.
A business continuity plan sets out procedures to mitigate and aid recovery in the event of the unexpected. Setting out an effective plan – that covers everything from business processes, employees, assets, to partners and suppliers – can help you to maintain or quickly resume business functions following a major disruption.
The reassuring thing is that, even if you don't have one in place when the unexpected occurs, there's still time to act.
Your business continuity plan should identify the critical areas of your business and any potential risks to these. By identifying risks and determining how they might affect your business, you can establish appropriate safeguards and procedures to get back on your feet as quickly as possible.
The following should be considered when creating a business continuity plan:
1 A business continuity impact analysis to identify the critical areas of your business and the resources required to ensure operational resilience and continuity of operations.
2 A business continuity team to lead your efforts.
3 Recovery strategies so that you have clear processes and procedures in place to recover critical business functions quickly and effectively.
4 Testing, feedback on, and improvement of your business continuity plan and recovery strategies.
5 Communication. While a business continuity plan is driven by a select team, to be effective, all employees must be aware of the situation, the plan and their responsibilities. You must also keep other stakeholders – customers, suppliers, partners – in the loop.
Business impact analysis
Business impact analysis determines which areas are most critical to your business and the resource requirements to ensure operational resilience and continuity during and after any disruptions. It helps you to understand risks and threats to your business' operational, financial, and reputational functions, as well as to the supply chain and your people.
An analysis is usually undertaken by business area/ function to:
1. evaluate the financial and operational impact of disruption to areas of your business and the risk to operations
2. establish the recovery time objectives, how quickly you need to recover a business function to ensure business continuity.
This information can be used to develop recovery strategies, solutions and plans.
Your business impact analysis also flags areas in which you lack the resources to support recovery. Gap analysis is a useful exercise to establish your business' recovery requirements compared to its current resources. It's also a good way of devising and assessing your recovery options and agreed-upon strategies.
There are a couple of questions that you should be asking at this point:
What are the most significant risks to the more profitable areas of my business? How can these be reduced?
What resources are required to ensure continuity in these areas?
Are there areas that I can pause, to focus on other areas?
The business continuity team
While you may lead the effort, it's important to have a team that spans the business in place to support the implementation and management of your business continuity plan.
Get your team involved and use their areas of knowledge to drive strategies.
Recovery strategies provide alternative means to restore business operations to a minimum, acceptable level. Your priorities will be governed by your business impact analysis and the recovery time objectives identified therein. You need to address each scenario identified in your business impact analysis.
One example of a recovery strategy is what’s called a manual workaround – essentially a plan B, it’s a temporary way to ensure the continuation of critical business functions following the disruption.
Recovery strategies require resources – including people, facilities, equipment, materials and technology – as identified in your gap analysis.
The following are questions are worth asking:
How do we ensure our people – across production, sales, marketing and support personnel – can continue to operate?
If our facility or equipment is damaged or out of operation, how do we meet customer demands?
If facilities are impacted, can we support work from home initiatives?
Is necessary business documentation accessible online?
How will we communicate and engage with our customers and other stakeholders (staff, suppliers, partners)?
Do we have the means to operate our business online if required (Does our online storefront have the capacity? Can we accommodate online sales?)?
How can we reduce disruption to the supply chain, if impacted?
Test, feedback, improve
A business continuity plan is never really complete, and while it's valuable to have mechanisms in place to minimise disruption, be aware that you will still be faced with the unknown.
Testing your business continuity plan will help to ensure that it's effective and provide the opportunity to observe results, share feedback and make improvements.
Communication, communication, communication
Communication and transparency in crisis are essential – whether it's communicating to your employees, customers, suppliers or the many other stakeholders you engage with.
In terms of your business continuity plan, this should be shared with staff internally, so that everyone knows its scope, their responsibilities and how they can expect the business to operate during and after this crisis.
You should alert customers to the disruption – where relevant. However, if there is a change in how your business operates and how they can access your business, they must be aware. The last thing you want is to lose customers because they think you are closed if you have, in fact, moved operations online, for example.
If things change, do not worry, what is important is that you keep people in the loop.